Centerspace Announces Financial and Operating Results for the Year Ended December 31, 2023, Provides 2024 Financial Outlook and Dividend Increase
- Centerspace reported an increase in Net Income to $2.32 per diluted share for 2023 compared to a Net Loss of $1.35 per diluted share in 2022.
- Core FFO per diluted share increased to $4.78 in 2023, a 7.9% growth from $4.43 in 2022.
- Operating income rose to $84.5 million in 2023 from $13.9 million in the prior year.
- Same-store year-over-year NOI grew by 9.0% driven by a 7.2% revenue growth.
- Centerspace acquired an apartment community in Loveland, Colorado for $94.5 million and sold thirteen communities for $226.8 million.
- The company repurchased 216,000 common shares for $11.5 million.
- Centerspace had $234.6 million of total liquidity on its balance sheet at December 31, 2023.
- The company entered into purchase and sale agreements for two communities with expected gross proceeds of $18.9 million post-December 31, 2023.
- Quarterly distribution of $0.75 per share/unit was announced for common shareholders and unitholders.
- A distribution of $0.4140625 per share on the 6.625% Series C Cumulative Redeemable Preferred Shares was declared.
- Centerspace provided a financial outlook for 2024 with ranges for Net Income, FFO, and Core FFO per diluted share.
- The company highlighted additional assumptions for 2024 including capital expenditures, value-add expenditures, and potential dispositions.
- Details for the earnings call on February 21, 2024, were provided for investors and analysts.
- None.
Insights
Centerspace's announcement of financial results, including a transition from a net loss in 2022 to net income in 2023, signifies a substantial turnaround in profitability. This is further underscored by the increase in Core Funds from Operations (FFO), which is a key metric in real estate investment trusts (REITs) as it provides a clearer picture of operating performance by excluding the effects of depreciation and other non-cash items. The growth in same-store Net Operating Income (NOI) by 9.0% is indicative of effective asset management and could be a positive signal to investors regarding the company's efficiency and potential for sustained revenue growth.
The reported acquisition and disposition of properties reflect a strategic portfolio realignment, which could be Centerspace's approach to optimizing its asset base for better financial performance. The share repurchase activity suggests management's confidence in the intrinsic value of the company, often viewed favorably by the market. However, the forward-looking statements for 2024, including a potential net loss per share, present a mixed outlook that may require close monitoring by investors.
The disclosed same-store weighted average occupancy rates remaining consistent around 94.7% to 94.9% are a strong indicator of stable tenant retention and demand for Centerspace's properties. This stability is crucial in a market where occupancy rates can significantly impact rental income and, consequently, NOI. The slight increase in occupancy year-over-year suggests a positive absorption rate in the markets where Centerspace operates.
The acquisition of new properties and the sale of others demonstrate Centerspace's active management of its real estate portfolio. The focus on the Colorado market could be in response to regional growth trends, while divestitures in other markets may indicate an optimization strategy or a shift in long-term focus. These transactions, along with the announced dividends, which include an increase for common shares, could be seen as efforts to enhance shareholder value and realign investment priorities.
The financial results of Centerspace, particularly the increase in operating income and Core FFO, suggest a robust economic environment for the real estate sector, at least within the regions of Centerspace's operations. The company's performance may be riding on broader economic trends such as employment growth, wage increases and demographic shifts driving housing demand. However, the projected net loss for 2024 introduces uncertainty, potentially reflecting broader economic headwinds or specific market challenges that could dampen investor sentiment.
The capital expenditure projections for same-store improvements and value-add expenditures indicate ongoing investment in property quality, which could be a strategic move to maintain competitiveness and support rental growth. The economic implications of these investments are twofold: they may lead to increased operating costs in the short term but could potentially yield higher rental income and property valuations in the long term.
Three Months Ended December 31, | Twelve Months Ended December 31, | |||||||
Per Share | 2023 | 2022 | 2023 | 2022 | ||||
Net income (loss) per share - diluted | $ (0.65) | $ (0.24) | $ 2.32 | $ (1.35) | ||||
FFO - diluted(1) | 1.11 | 1.16 | 4.27 | 4.32 | ||||
Core FFO - diluted(1) | 1.22 | 1.17 | 4.78 | 4.43 | ||||
Year-Over-Year | Sequential Comparison | YTD Comparison | ||||
Same-Store Results | 4Q23 vs 4Q22 | 4Q23 vs. 3Q23 | CY23 vs. CY22 | |||
Revenues | 3.9 % | 0.5 % | 7.2 % | |||
Expenses | (1.2) % | (3.6) % | 4.6 % | |||
Net Operating Income ("NOI")(1) | 7.6 % | 3.4 % | 9.0 % |
Three months ended | Twelve months ended | |||||||||
Same-Store Results | December 31, 2023 | September 30, 2023 | December 31, 2022 | December 31, 2023 | December 31, 2022 | |||||
Weighted Average Occupancy | 94.8 % | 94.7 % | 94.8 % | 94.9 % | 94.6 % | |||||
(1) | NOI, Funds from Operations, and Core FFO are non-GAAP financial measures. For more information on their usage and presentation, and a reconciliation to the most directly comparable GAAP measures, refer to "Non-GAAP Financial Measures and Reconciliations" and "Non-GAAP Financial Measures and Other Terms" in the Supplemental Financial and Operating Data below. |
Highlights for the Year Ended December 31, 2023
- Net Income was
$2.32 $1.35 - Core FFO(1) increased to
$4.78 7.9% per diluted share for the year ended December 31, 2023, compared to$4.43 - Operating income increased to
$84.5 million $13.9 million - Same-store year-over-year NOI(1) grew to
9.0% driven by same-store revenue growth of7.2% ; - Continued to grow
Colorado portfolio through acquisition of an apartment community inLoveland, Colorado consisting of 303 homes for an aggregate purchase price of$94.5 million - Thirteen communities in
Minnesota ,Nebraska , andNorth Dakota were sold for an aggregate sales price of$226.8 million St. Cloud market comprising 692 homes, two communities in theOmaha -Lincoln market comprising 498 homes, three communities in theMinneapolis-St. Paul market comprising 377 homes, and four communities in the Minot market comprising 712 homes and related commercial space. - 216,000 common shares repurchased for total consideration of
$11.5 million $53.44
Balance Sheet
At December 31, 2023, Centerspace had
Subsequent Events
Subsequent to December 31, 2023, Centerspace entered into definitive purchase and sale agreements for two communities with expected gross proceeds of
Subsequent to December 31, 2023, Centerspace repurchased 87,722 common shares for total consideration of
Dividend Distributions
Centerspace's Board of Trustees announced a quarterly distribution of
The Board of Trustees also declared a distribution of
2024 Financial Outlook
Centerspace is providing the following guidance for its 2024 performance.
2024 Financial Outlook | |||||
Range for 2024 | |||||
2023 Actual | Low | High | |||
Net income (loss) per Share - diluted | $ 2.32 | $ (1.31) | $ (0.99) | ||
FFO per Share - diluted | $ 4.27 | $ 4.54 | $ 4.80 | ||
Core FFO per Share - diluted | $ 4.78 | $ 4.68 | $ 4.92 | ||
Additional assumptions:
- Same-store capital expenditures of
$1,075 $1,150 - Value-add expenditures of
$25.0 million $27.0 million - Proceeds from potential dispositions of
$18.8 million $19.0 million
FFO and Core FFO are non-GAAP financial measures. For more information on their usage and presentation, and a reconciliation to the most directly comparable GAAP measures, please refer to "2024 Financial Outlook" in the Supplemental Financial and Operating Data below.
Earnings Call
Live webcast and replay: https://www.ir.centerspacehomes.com | ||||
Live Conference Call | Conference Call Replay | |||
Wednesday, February 21, 2024 at 10:00 AM ET | Replay available until March 6, 2024 | |||
1-833-470-1428 | 1-866-813-9403 | |||
International Toll Free Number | 1-929-526-1599 | International Toll Free Number | 1-929-458-6194 | |
Canada Toll Free Number | 1-833-950-0062 | Canada Toll Free Number | 1-226-828-7578 | |
Conference Number | 373306 | Conference Number | 297696 | |
Supplemental Information
Supplemental Operating and Financial Data for the year ended December 31, 2023, is available in the Investors section on Centerspace's website at https://www.centerspacehomes.com or by calling Investor Relations at 701-837-7104. Non-GAAP financial measures and other capitalized terms, as used in this earnings release, are defined and reconciled in the Supplemental Financial and Operating Data, which accompanies this earnings release.
About Centerspace
Centerspace is an owner and operator of apartment communities committed to providing great homes by focusing on integrity and serving others. Founded in 1970, as of December 31, 2023, Centerspace owned 72 apartment communities consisting of 13,088 homes located in
Forward-Looking Statements
Certain statements in this press release are based on the Company's current expectations and assumptions, and are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements do not discuss historical fact, but instead include statements related to expectations, projections, intentions or other items related to the future. Forward-looking statements are typically identified by the use of terms such as "expects," "anticipates," "intends," "plans," "believes," "seeks," "estimates," "will," "assumes," "may," "projects," "outlook," "future," and variations of such words and similar expressions. These forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance, or achievements to be materially different from the results of operations, financial conditions, or plans expressed or implied by the forward-looking statements. Although the Company believes the expectations reflected in its forward-looking statements are based upon reasonable assumptions, it can give no assurance that the expectations will be achieved. Any statements contained herein that are not statements of historical fact should be deemed forward-looking statements. As a result, reliance should not be placed on these forward-looking statements, as these statements are subject to known and unknown risks, uncertainties, and other factors beyond the Company's control and could differ materially from actual results and performance. Such risks and uncertainties are detailed from time to time in filings with the SEC, including the "Management's Discussion and Analysis of Financial Condition and Results of Operations" and "Risk Factors" contained in the Company's Annual Report on Form 10-K, in quarterly reports on Form 10-Q, and in other reports the Company files with the SEC from time to time. The Company assumes no obligation to update or supplement forward-looking statements that become untrue due to subsequent events.
Contact Information
Investor Relations
Josh Klaetsch
Phone: 701-837-7104
E-mail: IR@centerspacehomes.com
Marketing & Media
Kelly Weber
Phone: 701-837-7104
E-mail: kweber@centerspacehomes.com
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SOURCE Centerspace
FAQ
What was Centerspace's Net Income per diluted share for the year ended December 31, 2023?
How much did Core FFO per diluted share increase in 2023 compared to 2022?
What was the operating income for Centerspace in 2023?
What drove the 9.0% growth in same-store year-over-year NOI?
What acquisitions did Centerspace make in 2023?
How many common shares did Centerspace repurchase and at what average price?
What was the total liquidity on Centerspace's balance sheet at December 31, 2023?
What distribution was announced for common shareholders and unitholders?
What financial outlook did Centerspace provide for 2024?
What additional assumptions were highlighted for 2024?
When is the live webcast and replay of the earnings call scheduled?
